2023 (5) TMI 461 - AT - Income Tax

Ex parte order without deciding the issue on merits - Penalty u/s 271B - HELD THAT - The perusal of CIT(A) order reveals that CIT(A) has passed an ex parte order without deciding the issue on merits. Sub Section (6) of Section 250 mandate the CIT(A) to state the points in dispute and thereafter assign the reasons in support of his conclusion. We are of the view that by dismissing the appeal without considering the issue on merits, CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 of the Act. It is also a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. In view of these facts, we set aside the impugned order of CIT(A) and restore the issue to the file of CIT(A) for re-adjudication of the issues after granting sufficient opportunity of hearing to the assessee. Assessee is also directed to furnish the details called for by the lower authorities. In view of our decision to restore the issue to CIT(A), we are not adjudicating on merits the grounds raised by the assessee. Thus the grounds of assessee are allowed for statistical purposes.

Summary

Issues involved:
The issues involved in the judgment are related to the ex parte order passed by the Commissioner of Income Tax (Appeals), imposition of penalty under section 271B of the Income Tax Act, and the failure to provide sufficient opportunity of being heard to the assessee.

Ex Parte Order by CIT(A):
The appeal was dismissed by the Commissioner of Income Tax (Appeals) on the grounds of non-prosecution without giving sufficient opportunity to the assessee to be heard. The Appellate Tribunal found that the CIT(A) failed to consider the issue on merits as required by Sub Section (6) of Section 250 of the Income Tax Act. It was held that natural justice principles dictate that parties should be given a fair hearing. Consequently, the Tribunal set aside the order of the CIT(A) and directed the issue to be re-adjudicated after granting the assessee sufficient opportunity of hearing. The Tribunal allowed the grounds raised by the assessee for statistical purposes.

Imposition of Penalty under Section 271B:
The Assessing Officer had imposed a penalty of Rs. 82,334 under section 271B of the Income Tax Act. The assessee contended that the penalty was unjust and unfair, especially considering the appeal filed against the assessment order which covered the issue of penalty under section 271B. However, the Tribunal did not adjudicate on the merits of this ground as the main issue was the ex parte order passed by the CIT(A).

Failure to Provide Opportunity of Being Heard:
The Tribunal noted that the appeal filed by the assessee was pending since 2017, with multiple adjournments due to the absence of the assessee and lack of adjournment applications. Despite issuing notices, the assessee did not appear for the hearing. The Tribunal proceeded to dispose of the appeal ex parte, with only the Revenue's representative present. The Tribunal emphasized the importance of offering a fair hearing to all parties involved and directed the CIT(A) to re-examine the issues after granting the assessee sufficient opportunity for a hearing.